At the Berlin Air Show, Rheinmetall Pitches Its Future While the Market Stays Grounded
10.06.2026 - 18:33:48 | boerse-global.de
For all the fanfare surrounding Rheinmetall's debut at the ILA Berlin air show this week, the company's stock has been getting a decidedly cooler reception from Wall Street. Just as the DĂĽsseldorf-based defence group unveiled a new heavy-lift drone partnership and a raft of next-generation military platforms, Morgan Stanley chose the opening day to downgrade the stock to "Equal-weight," sending a ripple of selling pressure through the entire European defence sector.
The target of the analyst downgrade was clear: while Rheinmetall's order book has swelled to an estimated €73 billion, the market is increasingly focused on execution risk. The stock has lost roughly 40% from its September peak of €1,995 and is trading near €1,197, down 25% year to date. That puts it more than 10% below its 50-day moving average and well south of the 200-day line at around €1,617, leaving the shares valued at a price-to-earnings multiple of about 32 — a level that demands evidence of a solid growth trajectory.
A New Drone as the Centrepiece of the ILA Stand
On the exhibition floor, however, Rheinmetall is projecting confidence. The company signed a memorandum of understanding with eVTOL specialist ERC System and the state of North Rhine-Westphalia to industrialise the Victor U250 heavy-lift drone in Germany. The hybrid-electric cargo aircraft can carry up to 250 kg over 300 km at 250 km/h, taking off vertically. It is designed for military logistics, disaster relief and medical supply missions. Rheinmetall will contribute its certification as an aviation organisation, while the state coordinates site selection and subsidies. CEO Armin Papperger set a clear target: the system must scale both technologically and industrially, with several hundred jobs expected by 2029.
Should investors sell immediately? Or is it worth buying Rheinmetall?
Beyond the Victor U250, the company is using its 840-square-metre ILA booth to reposition itself as an integrated systems house for land, air and space — not merely a tank and munitions manufacturer. Standouts include the MQ-28 Ghost Bat autonomous combat aircraft, developed jointly with Boeing, and a new joint venture, Rheinmetall ICEYE Space Solutions, which has secured a framework contract to supply radar imagery to the Bundeswehr. The FV-014 loitering munition, which blends drone and artillery capabilities, is already rolling out under a multi-billion-euro framework deal with the German military that took effect in April 2026.
Romania Deal and a Clean Break from Civilian Past
Rheinmetall’s order pipeline received another boost from a freshly concluded €5.7 billion contract with Romania for Lynx infantry fighting vehicles and air defence systems. Yet converting that swelling backlog into near-term revenue remains a challenge — one the company will address when it publishes half-year results on 6 August 2026.
To sharpen its focus, Rheinmetall completed the sale of its Automotive division "Power Systems" in early June to the industrial group AEQUITA for roughly €350 million. The transaction marks the final step in its transformation into a pure-play defence contractor, a move that also increases its exposure to shifts in government military budgets. Morgan Stanley’s downgrade, which also dragged down competitors such as Hensoldt and Renk, signals that institutional euphoria over the sector’s two-year run is giving way to a more sober assessment of operational delivery. For now, the market is waiting to see if the transformation story can justify the premium.
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